The European Single Currency, euro, on Friday, June 1, consolidated gains and is set to break a six-week losing streak following a drop in Italian bond yields after a revived coalition deal between Italy’s two anti-establishment parties reduced concerns of immediate elections.
On Friday, the euro EUR=EBS was flat at $1.1691 against the dollar. On a weekly basis, it is set to eke out a small 0.3 percent gain, snapping six consecutive weeks of losses.
The single currency slumped earlier this week and Italian bond yields soared, with 2-year bond yields posting their biggest one-day jump in 26 years on Tuesday on fears that fresh elections in the euro zone’s third biggest economy could strengthen the hand of anti-establishment parties.
But the past two days have seen some stability with the euro recouping its losses thanks in part to renewed efforts to form a government and avoid new elections, ending three months of political turmoil.
Analysts were also getting more cautious of the dollar’s recent move higher — the greenback hit a 6-1/2 month high against a basket of its rivals earlier this week — on trade war fears and rising concerns the U.S. economic momentum may soften.
“At these levels, I think the dollar is nearly priced to perfection and we think the euro should see a rebound from later this year,” said Paul Baird, head of fixed income at Newton Asset Management, a subsidiary of BNY Mellon which manages $49.8 billion in assets globally.
Meanwhile, the dollar edged higher at 94.02 after posting its biggest monthly rise since November 2016 in May against a basket of rivals .DXY. It headed back towards a 6-1/2 month high of 95.03 hit earlier this week, Reuters reports.
